How to Keep Your Holiday Spending in Check

Tips on responsible spending, handling “frugal fatigue,” and more.


[See the Biggest Money Mistakes Couples Make.]

Americans in general are very hardworking people, but we've just become kind of lax at how we spend the money. And so, a social contract is merely something where you say, "This is how much we're going to spend on fun stuff, but this is how much we plan to save each month." What I think is the fun part about these contracts is the penalties if we don't follow the contract. That could be house chores. It could be giving up something that you enjoy. It could be giving a donation to a cause that you don't support. When it's in writing, it's much more real.

As we get ready for the holidays, what are some tips on keeping your holiday spending in check?

There used to be something called Christmas Clubs where people would figure out how much money they're going to need for Christmas, everything from presents to the meal. And they would divide that by 12, and put that away a little each month for next Christmas. And they wouldn't get much interest by the banks, but the banks would penalize them for taking the money out. And then in November, they'd draw that money out. Think about how much less stressful and anxiety-provoking Christmas would be when you have all the money already saved up!

The other Christmas shopping advice is just to sleep on it. I call it a 24-hour, cooling-off period. Salespeople know that a vast majority of people who leave the showroom will not come back. And so we know that. If we can use the 24-hour, cooling-off period to our advantage as consumers, we're just going to be that much better off because we have time to reflect. Some of these low-tech solutions to overspending are really some of the best.

It sounds like you're not a big fan of Black Friday or Cyber Monday?

The thing about Black Friday is that sales just get us fired up. And when we get fired up, our brains start creating or releasing dopamine and serotonin—these neurotransmitters chemicals that get us excited, and we make bad decisions. So if you can avoid that kind of party atmosphere, that pandemonium that goes along with shopping, you'll be better off. You'll be even better shopping on the Internet. You're going to be probably by yourself, you'll probably be a lot more rational than you would when you're chasing and struggling with other customers at Wal-Mart or wherever you're shopping to get all the bargains they have on Black Friday, and you may be better off just to be at home.